Issue 18-93 Economic Insights: B.C.

May 28, 2018

Statistics Canada released a new report in the publication Economic Insights summarizing recent changes in production, labour market and housing market activity in British Columbia. This is a small overview of the report. The full report can be found at http://www.statcan.gc.ca/pub/11-626-x/11-626-x2018081-eng.htm.

Economic Growth

Economic growth in British Columbia was the highest among the provinces in 2015 (+3.3%) and 2016 (+3.6%), and accelerated further in 2017 (+3.9%). From 2014 to 2016, British Columbia’s economy expanded at the fastest pace in a decade. Real estate and residential construction accounted for about one third of growth in 2015 and 2016. On an expenditure basis, household spending contributed to over half of the growth from 2014 to 2016. Household spending has increased in recent years, while capital outlays by businesses contracted. Following a 9.6% increase in 2014, non-residential business investment declined in 2015 and 2016. To a lesser extent, exports of goods and services supported growth during this period.

Labour Market

Labour market conditions improved markedly in British Columbia in 2016 and 2017, as the unemployment rate trended lower and employment rose among core-aged workers (aged 25 to 54). In December 2017, the unemployment rate fell to 4.6%, the lowest level among the provinces. However, the unemployment rate remains above pre-recession levels. More recently, the provincial unemployment rate edged up to 4.7% in March 2018, consistent with national trends.

Employment growth in 2016 and 2017 reflected both gains in Vancouver and improvements in other local economies across the province. In December 2017, the three-month moving average for the unemployment rate in Vancouver declined to 4.1% from 5.1% in December 2016. In December 2017, employment in Vancouver was 64,700 higher on a year-over-year basis, accounting for over three quarters of the overall gain for the province during this period. Victoria and Kelowna also contributed to the overall provincial employment increase.

Full-time work was mainly responsible for employment gains in British Columbia in 2017, as full-time jobs rose by 67,000 on a year-over-year basis in December, while part-time jobs increased 8,800.

As of December 2017, employment rose by 54,700 persons on a year-over-year basis for service providers and 21,300 for goods industries. The increase in service sector employment was led by finance, insurance, real estate, rental and leasing. Meanwhile, construction accounted for most of the gains in the goods sector’s employment. Together, these two industries accounted for almost half of the total employment gains in December 2017.

In 2017, the pace of earnings growth accelerated in British Columbia (+2.5%), rising at a faster rate than the national average (+2.0%).

Trade

British Columbia’s trade deficit narrowed in 2016 and 2017, to $8.4 billion in 2017 due to higher surpluses for energy products, forestry products, and building and packaging materials.

Retail sales in British Columbia rose 9.3% in 2017, following an increase of 7.7% in 2016. Motor vehicle and parts dealers contributed to almost one third of the provincial gains in 2017. Higher prices contributed to an increase in sales at gasoline stations. Higher sales in Vancouver accounted for over one third of the provincial gain in 2017.

Housing market

Housing starts in British Columbia have increased every year since the 2008-2009 recession. Higher starts in Vancouver and for multi-family dwellings, particularly for apartments, led the growth from 2014 to 2016. Following the introduction of the additional property transfer tax for Metro Vancouver in August 2016, housing starts declined in the fourth quarter of 2016 and in the first quarter of 2017. Home prices in Vancouver saw a similar trend, falling in last quarter of 2016 and the first half of 2017 and picking up in the later part of 2017.

Consumer Prices

Consumer price inflation, accelerated from mid-2015 until early 2016 in British Columbia. In 2017, inflation for the province averaged 2.1%, led by higher prices for gasoline and shelter. More recently, overall inflation in the province continued to increase, up 3.2% in March 2018.

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